Evaluating the Cost Efficiency of Specialty Physicians

Vol. IX, No. 4
July 2006

With the growth of consumer-directed health plans, pay for performance programs, and provider tiering, it is important that the tools used to rank physicians provide consumers and payers with an accurate representation of physician treatment behavior. In particular, accurate measures of physician cost efficiency allow consumers to make more informed decisions while helping health plans make better choices about which physicians to include in their networks. However, a recent HCFO-funded study by J. William Thomas, PhD, of the University of Southern Maine and Kyle L. Grazier, DrPH, of the University of Michigan assessed the feasibility of using episode-based physician profiling and identified a number of methodological issues that can influence the validity of cost efficiency rankings for some specialties.